This paper uses farm income tax returns (Schedule F) data from 62 dairy farmers in western and central Maryland and southwestern Pennsylvania to assess the relative financial performance of management intensive grazing (MIG) and confinement dairy operations over a fifteen year period. For the small dairy operations examined in this study, MIG farms were more profitable on a per hundredweight, per cow, per acre, and no less profitable on a whole farm basis. Confinement operators had higher gross income than MIG operators but expenses that exceeded those of MIG operators, so that MIG operators were at least as profitable. Profits of MIG operations were less variable as well, so that MIG operators faced less income risk. Land requirements likely impose the principal limitation on the size of intensive grazing operations.

Nutrient management planning has been advocated as a means of improving efficiency and reducing environmental problems but these gains may not be realized if plans overstate fertilizer requirements. Using data from a survey of Maryland farmers, we find that nutrient management planning was adopted more frequently by larger operations raising grain or cattle but not by those on more environmentally sensitive land. Independent crop consultants and fertilizer dealers were more likely to recommend increases in fertilizer use, consistent with fears about bias. Farmers preparing their own plans were more likely to recommend decreases in fertilizer use, suggesting the presence of hidden information.

The sustainability of agriculture and prospects for improving its environmental performance are inherently limited. Agriculture's high degree of variability makes direct regulation inefficient. Subsidies for improving environmental performance can have perverse consequences. Pollution taxes are likely the most efficient and effective form of policy. Interdisciplinary research is needed to provide models for performance evaluation.

Organic grain production can be as profitable as conventional grain production even without organic price premia. But organic farming systems require more labor and have longer peak labor periods, making it difficult for part-time farmers with off-farm employment to use them. Organic grain production systems improve soil capital (as measured by organic matter)--but so does conventional no-till grain production.

Hanson, James C., Erik Lichtenberg, and Steven E. Peters, “Organic versus Conventional Grain Production in the Mid-Atlantic: An Economic and Farming System Overview”, American Journal of Alternative Agriculture 12, 2-9 (January 1997).

Chambers, Robert G. and Erik Lichtenberg, “The Economics of Sustainable Agriculture in the Mid-Atlantic”, submitted to the USDA/EPA ACE Program, December, 1995.

Von Liebig argued that crop nutrient uptake will be limited by the least available nutrient. We develop a nonparametric way to test for limiting nutrients and yield plateaus and apply it data sets from Maryland and Iowa.

Corn following legume "green manure" cover crops can be more profitable than corn following winter fallowing. They appear to enhance nitrogen fertilizer uptake as well as fix nitrogen, so that reductions in profit-maximizing fertilizer application are smaller than might be expected. A wheat cover crop does not appear to deplete soil nitrogen (compared to winter fallow).

Lichtenberg, Erik, James C. Hanson, Morris Decker and Andrew Clark, "The Profitability of Legume Cover Crops in the Mid-Atlantic Region", Journal of Soil and Water Conservation 49, 582-585 (November/December, 1994).

Hanson, James C., Erik Lichtenberg, Morris Decker and Andrew Clark, "The Profitability of No-Tillage Corn Following a Hairy Vetch Cover Crop in the Mid-Atlantic Region", Journal of Production Agriculture 6, 333-437 (July-September 1993).